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Referring to the last lecture video on Chapter 5 on OpenTuition, the practice question, Klopp Co:
Since the cost of land and buildings were given as at 20X2, shouldn’t we depreciate it by 5 years if we want to revalue it in 20X7? Or do we not depreciate it since it says “economic life remains unchanged”?
Hi,
I think you are correct, I’ll re-check the question and answer to make sure it is right going forward.
Thanks
Hi is there an update on this? and can i know why the gain on depreciation expense of $ 20000 was added to retained earnings ?
thank you so much!Same here. According to the exam preparation solution on the notes, the revaluation was based on the carrying value, that being (land 500,000 + building 5,000,000-(5,000,000/50*5 dep^)= 5,000,000 substracted from the revalued amount 6,000,000 = 1,000,000 revaluation reserve.
Thus, there´s a difference of 500,000 between the two answers, the one on the video on the one on the notes.
Many thanks for shedding some light in this respect.Please, can anyone help me! I don’t get where did the share premium 600,000 * 0.8 = 480,000 come from? I don’t see any 0.8 figure anywhere. Correct me If I am wrong. Thank you!
@ boranaresulaj: I think your question referes to note (i)
On 1 Jan X8, Klopp Co issued 600,000 shares at their full market price of $1.80Buth since these are $1 shares, in the share capital was put at $600,000. This is the nominal value of the shares. I think the 0.8 comes from $1.80 – the nominal $1 = $0.80 PREMIUM which is entered into the share premium column. Please correct me if I’m wrong!
Note: you’ve probably passed the exam, but someone else may have the same query, so I believe I’m helping someone! Apologies if I’m wrong but you gotta admit it’s a cracking theory!
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